Government tells fracking firm it must prove ‘financial resilience’ to start drilling

Greg Clark tells Third Energy it must submit months late accounts before any decision can be made on whether it can frack in North Yorkshire

Business secretary Greg Clark said he has asked the Oil and Gas Authority to seek further financial information from the company. Photo: Jack Taylor/Getty Images

UK shale gas firm Third Energy will not be permitted to drill at its North Yorkshire site until it proves its “financial resilience”, business secretary Greg Clark said.

The firm, which was reported to be in line to begin fracking at Kirby Misperton imminently, has failed to publish its 2016 accounts, even though the deadline was 30 September 2017 — nearly four months ago.

In a written ministerial statement, Clark said:  

“I note that as of 24 January Third Energy UK Gas Limited and other related companies had yet to submit their accounts for the accounting period ending in December 2016, despite a statutory deadline of 30 September 2017 for them to do so.

“I have therefore asked the Oil and Gas Authority to seek further financial information from the company, including the required set of up-to-date accounts, to inform my decision.”

The news comes after the government announced a ‘fast track investigation’ into the directors of failed construction company Carillion, one of whom – Keith Cochrane – has been acting chief executive for Third Energy for much of the last year.

The company’s operations director retired days ago, in a move the company said was “planned for some time”.

Last year, Barclays bank – which is the majority owner of Third Energy – said it would be selling its stake in the company “at some point”.

A spokesperson for Third Energy said:

“After almost four years of planning and preparation, we are delighted that the Secretary of State is satisfied that Third Energy has met all of the thirteen technical requirements set out in section 4A of the Petroleum Act 1998. Our annual accounts are being finalised and we will now be working with the Infrastructure and Projects Authority and the Oil and Gas Authority towards achieving hydraulic fracturing consent from the Secretary of State.”

Responding to the news, Caroline Lucas, leader of the Green Party, said: “Fracking is doomed, despite the industry’s desperation to start drilling. This latest news reveals another reason to distrust the fracking firms – they can’t even get their financial house in order. It’s absolutely right that Third Energy are being forced to sort themselves out.”

‘Financial resilience’

In his statement, Clark also appeared to announce a new set of criteria that shale gas firms must meet in order to commence fracking.

He said: “The Government considers that the financial resilience of a company wishing to hydraulically fracture is a relevant consideration. As a matter of policy, we will therefore look at the financial resilience of all companies wishing to carry out hydraulic fracturing operations alongside their application for Hydraulic Fracturing Consent.”